Yes! Great prize this year. Strange WSJ coverage today. Glad you hinted at it and re-directed attention. Thanks for your thoughts and re-sharing links to your 2024 talks on Hall's work!
Hall's permanent income result shows up in the 2020 and 2021 transfer data: a large share of the checks went into saving or debt paydown, which fits Friedman better than a spending multiplier. Where I'd press is the rate rule. A Taylor response with a coefficient above one assumes fiscal policy stays passive, and 2021 to 2022 looks like a stress test of that. Is that episode evidence for FTPL, or just a late, badly calibrated rule?
"The Fed sets interest rates and ignores money supply. "
No, and I have Milton Friedman on my side--as he explained to Walter Heller back in 1968, in their famous debate Fiscal v. Monetary policy--interest rates are not 'the price of money'. Friedman did not approve of monetary policy conducted through interest rate targeting.
Not sure about permissions, but the 20 page report would be interesting to see. I guess to keep with the spirit of his lesson (from Lucas) though, it might not have been so good if he knew it would be shared publicly!
Great article!
Yes! Great prize this year. Strange WSJ coverage today. Glad you hinted at it and re-directed attention. Thanks for your thoughts and re-sharing links to your 2024 talks on Hall's work!
Hall's permanent income result shows up in the 2020 and 2021 transfer data: a large share of the checks went into saving or debt paydown, which fits Friedman better than a spending multiplier. Where I'd press is the rate rule. A Taylor response with a coefficient above one assumes fiscal policy stays passive, and 2021 to 2022 looks like a stress test of that. Is that episode evidence for FTPL, or just a late, badly calibrated rule?
"The Fed sets interest rates and ignores money supply. "
No, and I have Milton Friedman on my side--as he explained to Walter Heller back in 1968, in their famous debate Fiscal v. Monetary policy--interest rates are not 'the price of money'. Friedman did not approve of monetary policy conducted through interest rate targeting.
BTW, we could add a subtitle to Hall's new prize: 'Alvin (Rabushka), we hardly knew ye.'
Great write up, John. This is truly, implicitly, a second prize for Friedman and Lucas.
Not sure about permissions, but the 20 page report would be interesting to see. I guess to keep with the spirit of his lesson (from Lucas) though, it might not have been so good if he knew it would be shared publicly!
It shouldn't be a surprise that an award funded by a central bank would want to focus on Keynesian stabilization.